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Over the last five years, Britain, the United States and other countries have written off billions of dollars in loans to the world’s poorest countries. But a small group of vulture funds have been trying to divert that money into their own pockets. Investigative journalist Greg Palast traveled to the West African country of Liberia to investigate how vulture funds have been operating there and why Liberia lost a $20 million case against two vulture funds in a British court. [includes rush transcript]

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investigative reporter with the BBC and author of the books Armed Madhouse, The Best Democracy Money Can Buy, and Democracy and Regulation.

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This is a rush transcript. Copy may not be in its final form.

AMYGOODMAN: In Britain, lawmakers have voted in favor of a bill to restrict so-called vulture funds — that is, financiers that buy up poor country debts cheaply and then sue for massive profits. The Debt Relief Bill would pave the way for banning private investors from pursuing the world’s poorest countries for debts in British courts.

Over the last five years the British, the United States, the countries have written off billions of dollars in loans to the world’s poorest countries. But a group of vulture funds have been trying to divert that money into their own pockets.

Investigative journalist Greg Palast traveled to the West African country of Liberia to investigate how vulture funds have been operating there and why Liberia lost a $20 million case against two vulture funds in a British court. He filed this report for the BBC.

GREGPALAST: Welcome to Liberia in West Africa, where 80 percent of the people survive on less than a single dollar a day. Now these people are being told that they have to pay $28 million to a bunch of financial speculators known as vulture funds. This was not supposed to happen.

NELSONMANDELA: Sometimes it falls upon a generation to be great. An end to the debt crisis for the poorest countries.

GREGPALAST: Over the past five years, Nelson Mandela led a very successful campaign to get rich nations to forgive the debt of poor nations. The West wrote off billions of dollars.

Just as Britain, Europe and America were about to pay off all of Liberia’s debts, down swooped vultures, who put their claws on the money. They were waving worthless sheets of paper, old debts that they had picked up for next to nothing, and now they were demanding that these Liberians pay them ten times, even a hundred times, what the vultures themselves had paid for this worthless junk. There was outrage.

WINSTONTUBMAN: I would say to them, do you know you’re causing babies to die all over Liberia? Do you know you are making it almost impossible for this country to get back on its feet?

HANSHUMES: The blackmail that’s going on here is, if somebody doesn’t pay us something that we want, we’re going to hold up the development of the Liberian economy.

PRESIDENTELLENJOHNSONSIRLEAF: Where’s their conscience? What do they say as a conscience? They don’t care?

GREGPALAST: So who are these vultures? Vultures collect on debts of the poorest nations. But they never lent these poor countries any money at all. So how did these American speculators get their hands on Liberia’s debts?

We’ve come to the offices of Greylock Capital, big players in the industry. Greylock CEO Hans Humes tells us how he ended up with some of Liberia’s debts.

HANSHUMES: I ended up buying a lot of the loans that we had in Liberia when I called one of the banks that was going through a merger thirteen, fourteen years ago, and I said, “Hey, by the way, you were a lender to this African country.” And the guy said, “No, I’m not.” A couple days later, he said, “You know what? You’re right. We found this box in this warehouse that had files for all these loans. Do you want to buy all of them?”

GREGPALAST: The reason Hans and other speculators were able to buy up Liberia’s debt dirt cheap was war. In the ’80s and ‘90s, Liberian warlords were chopping the country into bloody pieces, killing one in ten Liberians. Humes and others were willing to wait until peace could be restored. But for some vultures, Liberia’s misery was an opportunity.

Four thousand five hundred miles away from the mayhem, they file a lawsuit in this courthouse in New York City. Now, Liberia didn’t really have a government. It was run by a bunch of warlords under UN sanctions. Not surprisingly, Liberia doesn’t show up in the courthouse, and they lose automatically, when the judge issues this default judgment requiring the nation to pay $23 million.

Who was behind this lawsuit? The key figure is Eric Hermann, the owner of vulture fund FH International. And here he is, at a chandelier-lit gala.

Hermann refused several requests to be interviewed, so we went to his office to ask why he sued war-torn Liberia. But his office seemed to have vanished.

BUILDINGPERSONNEL: Are they not there? They were there the other day. I’m sorry.

BUILDINGSECURITYMANAGER: They don’t want to be interviewed. They don’t want to be seen. So we’re going to have to ask to you to leave the building.

GREGPALAST: OK, and do you know why they took the sign off their door?

BUILDINGSECURITYMANAGER: I have no clue.

GREGPALAST: But we had a clue. He was at his huge gated estate. But we couldn’t get close.

In the village of Demeh, houses are a bit smaller. These Liberians are rebuilding their homes with mud bricks they made themselves.

You’re not paid?

DEMEHVILLAGER: Yes, just a volunteer.

GREGPALAST: You’re volunteering?

DEMEHVILLAGER: Yeah.

GREGPALAST: For the community?

DEMEHVILLAGER: Yes.

GREGPALAST: Rebuilding Howa Murvee’s home costs just $100 for supplies like cement. Howa is a young donut baker. Her grandfather was beaten to death in front of her during Liberia’s long civil war. And every house in the village was destroyed. Now, nameless vultures are fighting to take $28 million from the Liberians, enough to rebuild a quarter-million homes. The village elder says it’s an unfair fight.

T. BAIFLAHN: It’s like someone that is amputated, and you say, “Come and fight me.” How can I fight? You tell me. You’ve got two arms; I got no arms. And you expect me to fight you.

GREGPALAST: This is not a fight Liberians were expecting, because in 2007, all of Liberia’s creditors, including Eric Hermann, agreed to accept just three cents on the dollar for all that nation’s debts.

Then it emerged that Eric Hermann had quietly transferred his part of the debt to a secretive fund called “Hamsah.” Under the three-cent deal, Hermann would have received $1 million. But now, Hamsah sued in London for more. And that’s how Liberia ended up getting hit with this $28 million judgment. Insider Humes was stunned at what he considers such gaming of the debt reduction process.

HANSHUMES: All they’re trying to do is exploit the system, hold the system hostage, to get some sort of excessive returns.

GREGPALAST: Liberian diplomat Winston Tubman is infuriated.

WINSTONTUBMAN: We see a lot of this in the world, people who sell drugs to kids, people who give arms to child soldiers to go and do what they did here in Liberia. They are people who put making a buck above everything else.

GREGPALAST: Britain’s Parliament agrees. They voted last Friday to ban vultures from their courts.

PRESIDENTELLENJOHNSONSIRLEAF: I say bravo. We’ve been waiting for a parliament or an assembly to take this kind of hard decision, to be able to bring these funds into reason.

GREGPALAST: Liberia’s president Ellen Johnson Sirleaf.

PRESIDENTELLENJOHNSONSIRLEAF: Maybe the US Congress and maybe, you know, some others in Europe will pick up this gauntlet and will follow the example of Britain and move that, because it’s just so unfair to poor countries.

GREGPALAST: Today, with the end of war, things are looking up for Liberia. There’s a surge in literacy. Hopes are rising. But it’s all threatened by lawsuits by vultures. The President has a message for them.

PRESIDENTELLENJOHNSONSIRLEAF: Look, here’s a country having two decades of turmoil, of death and destruction, now trying to find its way back, trying to give its young people a future. You should not be the one to become an obstacle towards the achievement of this. Have a conscience, and give this country a break.

AMYGOODMAN: That report from investigative journalist Greg Palast. Those last words from the President of Liberia, the first woman president of Africa, Ellen Johnson Sirleaf.

Greg Palast, joining us here in New York, welcome to Democracy Now! Further expand on what we watched here and listened to.

GREGPALAST: Yeah, well, the interesting thing was we almost blew the story, because I was working with, you know, Gonzo journalists Rick Rowley and Jacquie Soohen, and they saw our car from the stakeout in front of this vulture’s house. And —-

AMYGOODMAN: And this is in New York?

GREGPALAST: This is in New York, Harrison, New York. This is where these vultures come from. These are where these speculators operate from.

And what happened was, they got the word. They figured out that we were staking them out, so -— at his big palatial house. That entire Liberian could literally fit in his house. We measured it, the square footage. And we went to his office. By the time we got to his office, the vulture — this is a billion-dollar vulture fund — had removed the plaques from the office wall — this is just outside of New York — removed the plaques from the office wall, removed the suite numbers, and locked all their employees inside.

And that — when we ran that report last Thursday in Britain, the next day Britain outlawed vulture funds. They said if you are so ashamed of your work that you rip the plaques off your walls and hide inside, you shouldn’t have access to the British courts. But then, of course, how can they have access to the US courts? That’s what we have to move on now.

AMYGOODMAN: When you aired a piece on vulture funds on Democracy Now! in 2007, Congressman Conyers saw the piece, and he took the issue — was going to see President Bush that day.

GREGPALAST: That’s right. He went and took it — Congressmen Conyers and Payne —-

AMYGOODMAN: And New Jersey Congressman Payne.

GREGPALAST: —- saw the report on Democracy Now!, and they went right from the report right into George Bush’s office in the Oval Office and said, “What is this stuff? What are these vultures, who are basically sucking down and siphoning off the aid money meant for the poorest nations on the planet?” Bush said he would do something. I should say, the last guy, Goldfinger, these guys — you have to understand, they buy up debt for nothing. They haven’t lent anyone anything. They buy up the debt for like a penny on the dollar, and then they sue for 200 or 300 cents on the dollar. And sometimes, in the case of Zambia, they used bribery, intimidation, hiring Henry Kissinger as a lobbyist, whatever it takes, to squeeze these countries and basically grab what was supposed to be aid money for these countries.

Now, Britain has outlawed this, saying that you cannot attack these poor countries. If there’s a deal with the IMF, you have to go along with the deal. You cannot seize the aid money. Why can’t we do that in the United States? In fact, Maxine Waters has put in a bill to do just that.

AMYGOODMAN: It’s interesting, the Supreme Court Monday rejected an appeal by bondholders seeking a piece of Argentina’s US-based pension assets. Argentina said the petitioners were vulture funds that bought the distressed sovereign debt of deeply — at a deeply discounted rate in order to speculate in litigation against the country.

GREGPALAST: Yeah.

AMYGOODMAN: So that happened in the Supreme Court, a positive decision.

GREGPALAST: Yeah, we have some better rules in the US. And what happened there is that, look, Argentina was being ripped off by usurious interest rates and really being jammed by speculators. And now they want to seize — now these guys have taken the debt, bought it for pennies on the dollars, and want to seize literally the Social Security system of the nation of Chile. At least the US Supreme Court —-

AMYGOODMAN: Argentina.

GREGPALAST: Excuse me, of Argentina. At least the Supreme Court has said no to that.

AMYGOODMAN: We only have thirty seconds. What do you think President Obama should do?

GREGPALAST: He has the right, under the US Constitution, to say, “You cannot use our courts.” It’s unique to the US Constitution, nowhere else. He should put down the rule, you cannot rip off -— you cannot steal our aid money that was supposed to go to the world’s poorest nation, and then move on the Waters bill, the anti-vultures bill.

AMYGOODMAN: And that bill says?

GREGPALAST: And that bill says that basically the British rule, which Obama — which, excuse me, George Bush had rejected, which says you cannot collect more money than has been accepted by the other creditors and the IMF, no more vulture speculation. It can end.

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